What is a mortgage broker?
When you obtain a mortgage, you can work with an officer in a bank or other lending institution, or you can work with a mortgage broker. It is important to understand the differences between a bank loan officer and mortgage broker before taking out a loan.
Bank loan officers
Banking agents in a bank, credit union or other financial institution sell and process mortgages where they work. They can offer a wide variety of loans, but typically come from the bank, credit union or lending institution specific.
Mortgage Brokers
A mortgage broker is someone who gets paid a fee to bring borrowers and lenders. Mortgage brokers work with a wide variety of lenders from different institutions. Runners analyze the credit status of each person to decide what is the best lender to meet the needs of that person. A broker should help you find the best option for you. Sometimes this means not only lower monthly payment or lower interest rate, but the broker can also help assess which mortgage company can help you close your loan quickly and smoothly. The broker sends the request of the buyer of the house to one or more lenders in order to sell it, and works with the chosen lender until the loan is closed.
Here are some questions to ask your mortgage broker:
- Does licensed by the state? In most states, mortgage brokers must be licensed to carry out the activity in the state in which you buy a house. You can ask the broker’s license number and check with the Division of Financial Institutions to check the license number of the mortgage broker you chose.
- What is the interest rate offered to me and is the best possible interest rate based on my credit score? Your mortgage broker can help you find the best rate for you. A lower interest rate means lower payments. Your credit score is one of the main criteria used by lenders to determine the interest rate offered you. A higher credit rating you should get a better rate than a low score.
- As a mortgage broker, how much money will be paid to you? Part of the work of a mortgage broker is to bring borrowers and lenders. Brokers are paid for providing these and other services. Broker fees can be negotiated. These fees are disclosed in the state of completion of closure of the Department of Housing and Urban Development and may include a broker’s origination fee, processing and application. Lenders also may pay the broker a yield spread premiums, which is a payment to the lender corridor, resulting in your receiving a loan with a higher interest rate than would otherwise have obtained. A mortgage lender or banker will also receive a payment for the service of providing the loan. Their fees may include items such as a processing fee, per application and a fee for document preparation. These rates may also be negotiated.
- How will fees be charged to me? Within 3 days of filing an application with your broker, he or she will provide a list called the Good Faith Estimate This list will contain the expected charges for your loan. Many states also require the broker to provide independent statements listing the fees and charges will be charged. Are asked to your broker and lender who will provide a list of all fees paid by you, including payments to third parties such as known credit report and appraisal fees. The list should also include prepaid items, payments made by the lender the mortgage broker, or charges of third parties not connected with the lender.These rates may not accurately known until later in the origination process, therefore must request your broker or lender to provide an updated list of fees and charges at various points during the process. Fees as outlined in your good faith estimate and charges actually paid at closing do not have to match exactly, there should be a large increase in any of the charges require you to pay.
- Who is my lender? The mortgage broker does not pay the money the same, the funds come from the lender. While your broker helps you choose, make sure you understand all terms of lenders to compare and get the best for you.